Rule 120, Pre-Foreclosure in Broomfield, Colorado

3 Replies

I was going through the Broomfield, Colorado foreclosure motions and noticed a few nice homes in very nice locations that will be going to foreclosure in November. 

It seems like my next course of actions would be to contact the current owners and see if I could work a deal out with them prior to the motion being heard in the court. 

Is this correct? What options do I have to help out? Section 2? Can I do seller financing with him? Outright buying the home from them in a short sale/other options? Any other ideas?


Chris Shipman

@Chris Shipman  here in CO foreclosures are handled by the public trustee, which is a county office.  I've not looked at Broomfield county, but most public trustees have a web site that lists pending actions.  Auctions typically occur on Wednesdays, though Denver county does them on Thursdays.  They will publish the list of properties to be sold on Monday afternoon (Tuesday in Denver) and that's when you have some real details.  However, those details will be only for the lender that's foreclosing.  There may be other senior liens that will remain in effect even if you buy the house.  A title search is essential to avoiding surprises.

The only accurate source of information is the lender or lien holder.   Deeds of trust are recorded here, with amounts.  So, you can do a search for a property in Broomfield recorder records and see what comes up.  The deed of trust will list the loan terms.  That enough to calculate a loan balance, assuming the borrower has made all payments on time.  But that's unlikely.  So, its just an estimate.  The way you get accurate data is to get an "authorization to release information" signed  by the borrower.  Some lenders require notarization.  To get this far, a discussion with the owner is required.

You absolutely can buy the house directly from the owner up to the time of the foreclosure sale.  Not sure how close you can cut it. You have to get the foreclosing lender to withdraw the sale, you can't do that yourself.

Colorado has some very strict laws about dealing with owners in foreclosure.  These specify specific verbiage and font sizes that must be used in your contract.  

I think you mean subject to by Section 2.  That might be a possibility.  Trouble is many houses that go into foreclosure are significantly underwater.  Makes little sense to buy those subject to because you would be paying (by taking over the loans) more than the property is worth.  Might be an option if the property is only slightly underwater, since prices are rising here (who knows for how long, though.)

Short sale is an option if they are underwater, are willing to cooperate, do have some hardship, and you can navigate the rocky shoals of the short sale process.

Keep in mind that folks in this situation are the target of a lot of investors.  If you write or call them (beware of do not call lists) then you're one out of probably a dozen or more contacts they've had with investors.

I second what @Jon Holdman   said.

Remember if you purchase the property from the owner, they must file a notice of intent to cure 15 days before the sale date or the bank does not have to let them get out of the foreclosure.

Sub2 deals work in high appreciation markets. You might buy when it's under water but the idea is that barrier to entry is low and appreciation will bail you out in a few years. If the payment is low enough you can make money on rent while you wait for appreciation to work it's magic.

After the owners have been in default several months, it's usually hard to do Sub2 deals because the amount of money (late fees, attorney fees, and deficiencies) you need to bring them current is more than you want to risk on an upside-down property.

I contact the owners by knocking on their door, but be ready for anything. These people are  in a horrible position. 

Know your comps as more and more properties have moved into the black area & the owners don't know it yet. 

You can do a short sale (I recommend using a SS negotiator and an agent to handle it) or buy it for an agreed upon price. I wouldn't recommend seller financing for people in these types of situation. Wholesale the deal or take possession. 

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